In this article, we discuss the 5 best Roth IRA stocks to buy according to hedge funds. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Roth IRA Stocks To Buy According To Hedge Funds.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 138
Apple Inc. (NASDAQ:AAPL) is perhaps the most famous technology company in the world. It recently announced a new lineup of laptops and phones. Both products are expected to drive the revenue for the company through the holiday season into the new year. However, supply chain issues could hit a part of the sales, according to market analysts. The company has also announced that it will be adding a much-requested health technology to the new AirPods, a flagship product of the firm.
On October 19, investment advisory DA Davidson raised the price target on Apple Inc. (NASDAQ:AAPL) stock to $175 from $167 and kept a Buy rating on the shares, underlining that the products of the firm had benefited from the pandemic.
At the end of the second quarter of 2021, 138 hedge funds in the database of Insider Monkey held stakes worth $145 billion in Apple Inc. (NASDAQ:AAPL), up from 127 in the preceding quarter worth $130 billion.
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
4. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 143
Keefe Bruyette analyst Sanjay Sakhrani maintained an Outperform rating on PayPal Holdings, Inc. (NASDAQ:PYPL) stock with a price target of $340, highlighting that a potential purchase of Pinterest by the company could make sense for the firm in the context of a long-term vision of a super application. Other investment advisors like Cowen and Baird also took this point of view on the acquisition. The company purchased Paidy, a Japanese payments platform, for $2.7 billion last month.
PayPal Holdings, Inc. (NASDAQ:PYPL) has also been exploring investments in the equity trading sector as retail trading booms across the globe. A report indicates that the first phase of the new platform will be limited to users in the US.
At the end of the second quarter of 2021, 143 hedge funds in the database of Insider Monkey held stakes worth $16.3 billion in PayPal Holdings, Inc. (NASDAQ:PYPL), the same as in the preceding quarter worth $14.7 billion.
In its Q4 2020 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and PayPal Holdings, Inc. (NASDAQ:PYPL) was one of them. Here is what the fund said:
“For the full year 2020, one of the top performers was PayPal, which we purchased in 2019, the company continues to take market share in digital payments and has seen an acceleration in user adoption and engagement, especially within their “silver tech” or older user demographic. We expect many more years of ongoing double-digit growth from their various business segments and new initiatives.”
3. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 156
Mastercard Incorporated (NYSE:MA) is another payments firm that has solid fundamentals and could drive long-term growth for investors in years to come. The company has recently partnered with Demica, an alternative finance solutions provider, to launch a new set of payments services for the supply chain industry. It is also expanding presence in the crypto universe, extending a partnership with Bakkt, a crypto firm, to expand the access of users to cryptocurrencies and digital assets.
In August, JPMorgan analyst Tien-tsin Huang had raised the price target on Mastercard Incorporated (NYSE:MA) stock to $430 from $427, reiterating an Overweight rating and underlining that payments players were outperforming the wider market this year.
Among the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated (NYSE:MA) with 5.8 million shares worth more than $2.1 billion.
In its Q4 2020 investor letter, Bretton Fund, an asset management firm, highlighted a few stocks and Mastercard Incorporated (NYSE:MA) was one of them. Here is what the fund said:
“While consumers resumed much of their spending by summer, what and how they used their Visas and Mastercards changed. For obvious reasons, people shifted to contactless payments—one of the Covid-era changes we think is permanent—and replaced travel purchases with online shopping and food delivery. Consumers spent more on their debit cards and less on their credit cards; Visa and Mastercard make more per transaction on the latter. They also make more on cross-border transactions that come mostly from international travel, which ground to a halt early in the pandemic. Visa’s and Mastercard’s earnings per share fell by 7% and 16%, respectively, compared to their usual mid-teens growth. We’re not too worried, and we think they’ll catch up nicely in the post-vaccine world. Visa’s stock returned 17.1% and Mastercard’s 20.2%.”
2. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 190
Alphabet Inc. (NASDAQ:GOOGL) owns internet search engine Google, video sharing platform YouTube and other technology-related products. The stock is an analyst and hedge fund favorite. The shares have soared by over 95% over the past twelve months. They are now trading at all-time highs and coming closer to the $3,000 per share price barrier. The company has already crossed $1.8 trillion in market capitalization.
On October 27, BMO Capital raised the price target on Alphabet Inc. (NASDAQ:GOOGL) stock to $3,200 from $3,000, keeping an Outperform rating and appreciating the earnings beat of the firm in the third quarter.
At the end of the second quarter of 2021, 190 hedge funds in the database of Insider Monkey held stakes worth $26 billion in Alphabet Inc. (NASDAQ:GOOGL), up from 185 in the preceding quarter worth $24 billion.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 238
Microsoft Corporation (NASDAQ:MSFT) is one of the most valuable firms in the world and has been at that position for decades now. The company, while offering a solid product, keeps reinventing itself to go with the times. Presently, besides the software business, it has ventured into the cloud and artificial intelligence industries that are expected to play a key part in the future earnings growth of the firm. It also beat market estimates on earnings per share and revenue in the first fiscal quarter results posted on October 26.
Morgan Stanley analyst Keith Weiss recently raised the price target on Microsoft Corporation (NASDAQ:MSFT) stock to $364 from $331 and kept an Overweight rating on the shares, noting that the firm was well positioned across the portfolio and was driving revenue growth.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ:MSFT) with 24.8 million shares worth more than $6.7 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
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